HOW PAYPAL INDIA WORKS: THE GUIDE TO SEND AND RECEIVE MONEY USING PAYPAL

The PayPal is the best and most trusted online payment processor in the world. The PayPal allows us to send, receive money all around the world and we can use PayPal to buy products & services on international sites and accept payments for business. The PayPal is the first trusted online payment processor to create a revolutionary service to transfer money anywhere from the world within seconds replacing checks and direct transfers. PayPal has re-started their services in India which has several great features. PayPal India is a gift for the online freelancers, bloggers, companies to receive payments from the overseas countries very fast. This article explains how PayPal India works and guides to send and receive money using PayPal India accounts.

What is PayPal?

The PayPal is the world's largest payment processor established in 1998. The PayPal allows us to send and receive money anywhere in the world for personal and business purpose. And apart from sending and receiving money, PayPal acts an online wallet to store money*.

What is PayPal India?

The PayPal India is the services provided by PayPal in India only for the India residents. PayPal India provides country specific services like sending money to users of other countries in their currency like USD($), GBP(£), EUR(€) etc and receiving money to the Indian bank accounts in Indian Rupee(₹).

Benefits of using PayPal:

The PayPal helps us to send and receive money all over the world. The PayPal transactions are instant that the money will be sent and received with seconds.

The PayPal allows us to transfer even little amount of money. Users can send and receive even $1 or less from international customers. This is impossible in the case of direct deposits and wire transfers.

The PayPal transactions can be done at a high speed for a low cost while the bank transfers will take few days and the fees will be higher to complete the transaction.

The PayPal can be accessed by sitting at home or anywhere using PayPal app on smartphones.

Apart from sending and receiving money directly, PayPal helps the online shoppers to buy products from the international shops with buyer protection.

The PayPal automatically transfer the incoming funds to the local bank account in the home currency, no matter whatever currency we receive.

The PayPal is highly secure and easy to use compared to the other online payment processors.

Requirements and eligibility to become a PayPal India member:

PayPal has come up with a set of rules after restarting their services in India. If you want to use PayPal services, you must fulfill all the requirements.

To start a PayPal account, you must have a valid email address. Mobile number is optional but to protect your account you must link your mobile number to the PayPal account.

You must have a bank account in RBI authorized banks to send and receive money.

You must have the PAN card to get your account verified. No transactions can be made without proper verification.

The name on your PAN card, bank account, and PayPal account should exactly match. Make sure you check your name on the PAN card and bank account while starting the account on the PayPal.

How to start PayPal account in India:

To start PayPal account - Click here. In the PayPal home page, click sign up to start.

Select the Personal account to start the account as an individual. If you're an online business, select the business account and click next.

In the next page, you will be asked to enter your country, email address and create a password to protect the account. When done, click next.

The third step is the most important step where you should enter all your banking details. Enter you name as given on the bank account(which is almost impossible to change in future), enter your residential address. You will be asked to enter the date of birth which is really important. You cannot change the date of birth once the account is created. The date of birth should be submitted to retain your account if you loose your password. Enter your mobile number and click next.

In the final step, you will be asked to link your credit card or debit card. You can link your card during the sign-up process or you can do it later. I recommend not to add the card details unless you're going to make any purchase.

Now the registration process is complete, you have to verify your email in order to proceed.

Verifying PayPal account:

In order to send and receive money, your PayPal account must be verified. Most of the online job sites will not pay you if your PayPal account is unverified.

Verifying your email and mobile phone number will not make the PayPal account verified. You must link your bank account or credit/debit card and PAN number to get your PayPal India account verified.

Reserve bank of India(RBI) has made these steps mandatory in order to prevent unauthorized illegal transactions. Without PAN card and bank account, you cannot verify your PayPal account. In such case, you can create a PayPal account for your Family members.

The steps to verify the PayPal account is given below.

Adding/Linking bank account to PayPal account:

After registration, log into your account and set the security questions which will be used to verify if you forget the password.

In the account menu, click payment methods. A page will appear similar to the screenshot given below.

Now click the link bank account button. You will be redirected to a page as shown below.

You have to enter your bank account number and bank ISFC code. Click designate as auto-withdraw to set this bank account to enable auto withdrawal. If you link only one bank account, it will be considered as default and the funds will be automatically withdrawn to that bank account as per their terms.

Now the bank account is linked to the PayPal India account and it should be verified again. You must confirm your bank account after adding the bank details.

You will receive a mail later asking you to check your bank account for two small deposits. Wait until you receive deposits from the PayPal. The example of the PayPal deposits to confirm the bank account is given below.

You can find the PayPal deposits in the images given above. They have deposited ₹1.01 and ₹1.04 respectively in the linked bank account.

If you've received the funds, go to your PayPal account and click the bank account linked with "ready to confirm" as shown above.

You must enter the amount received in the bank account in the two box as shown above and click confirm.

Now your Indian bank account is confirmed by the PayPal India. When you go to the payment methods, you can find the account is confirmed. Also, you will receive a mail regarding the change.

You can add more than one bank accounts and choose any bank to withdraw the incoming funds. One of your bank accounts should be made default to automatically transfer the funds within the limited time.

Adding/Linking credit or debit cards to PayPal account:

Linking the credit or debit card will allow us to purchase online products & services faster and safer. To link credit or debit card, go to the payment methods and click, link a card. Add the card details.

The PayPal will make a small charge to the card. A four digit code will be found on the card statement.

The code should be entered in the box given to confirm that the card is under the user control and not others as shown above.

Once the card is successfully linked, PayPal will send a mail reminding the changes made to the PayPal account.

There are no limitations in adding the cards to the PayPal account. You can add cards of different banks and other people until you have control over the card.

While paying through PayPal, you will not be asked to enter the OTP or verified password. The money will be debited once you click pay. So, be careful about the account security.

Banks that supports credits card and debit card payments through PayPal in India:

PayPal India only supports debit and credit cards of certain major banks. This table will help you to spot your bank. PayPal only accepts only major credit and debit cards which include Mastercard, Visa, American express and Discover. PayPal does not support Rupay cards at this moment.

List of Indian bank(s) credit and debit card that is accepted by PayPal

Bank name

Credit card

Debit card

Remarks

Major premium banks that accept international card payments through PayPal

Axis Bank

✔

✔

Fully supported

Citibank

✔

✔

Fully supported

HDFC Bank

✔

✔

Fully supported

ICICI Bank

✔

✔

Fully supported

State Bank of India

✔

✖

No debit card

Kotak Mahindra Bank

✔

✔

Fully supported

Other banks that accept international card payments through PayPal

Andhra Bank

✔

✖

No debit card

Indian Bank

✔

✖

No debit card

Indusind Bank

✔

✔

Fully supported

Jammu & Kashmir Bank

✔

✖

No debit card

Standard Chartered Bank

✔

✔

Fully supported

Vijaya Bank

✔

✖

No debit card

The Ratnakar Bank

✔

✖

No debit card

IDBI Bank

✔

✔

Visa only

Federal Bank

✔

✔

Fully supported

Canara Bank

✖

✖

Not supported

Purpose code:

In order to make your account fully verified and to receive the payments to the India(n) bank account(s), you must add the purpose code.

Mostly PayPal account is used by the freelancers to receive money. If you're an online worker or do online jobs on sites like Clixsense, Fiverr etc., freelancer, advertiser or a blogger you can select "Advertising and market research" as purpose code.

If you sell products, import/export products, offer travel services, you must select the relevant purpose code. Once you select the purpose code, your account will be eligible to withdraw funds to the local bank account(s).

How to receive money through PayPal account in India:

The PayPal is mainly used in India by the freelancers, webmasters, small import & exporters, service providers etc to receive money through PayPal. This section will explain how does PayPal India works when receiving money.

Once you create the PayPal account, you can use the PayPal email or PayPal.me URL to receive money to your PayPal account. Most of the online companies will ask you the PayPal email ID in order to process the payments.

Here is the example of how does PayPal work when receiving money. When someone or a company send a payment to the PayPal account it will be loaded into the PayPal account within few seconds.

The PayPal will send an email when the payment is received as shown above. According to the RBI guidelines, one cannot store money on the PayPal India wallet for more than a week. The PayPal will automatically transfer the funds to the bank account linked to the PayPal account.

How does PayPal work with bank account:

How to withdraw the funds to bank account from PayPal India:

After the new guidelines set by the PayPal India, no one can store their money on PayPal wallet. Any funds received will be automatically converted to Indian Rupee and deposited in the bank account linked to the PayPal account.

In the image given above, you can find the amount received to the PayPal account is automatically converted to Indian Rupee equal to the exchange rate on that particular day.

After currency conversion, the converted amount will be automatically transferred to the default bank account.

It will take up to 7 days to see the funds in the bank account transferred by PayPal.

The PayPal will transfer funds using NEFT feature which will be slower compared to instant fund transfer feature IMPS.

How to manually withdraw money to India(n) bank accounts:

Though PayPal will automatically transfer the incoming funds within a few days to the local bank account. You can also manually withdraw funds immediately after receiving funds to transfer money to the bank account as soon as possible.

Also, the manual withdraw feature helps the PayPal India users with more than one bank account linked to their account. Usually, PayPal will begin transfer to default bank account. If you wish to withdraw to another bank account, you must use manual withdrawal or you must make the other bank account default.

You can withdraw total funds to two or more bank account manually while automatic transfer will transfer the entire funds present on the PayPal account to the default bank account.

To manually withdraw money from PayPal account, you must click withdraw money and select the bank account. Enter the amount you wish to transfer and click continue.

PayPal.me - Simplest way receive money to PayPal account:

The PayPal.me is a premium feature available for all the PayPal users. Using the PayPal.me we can ask other to pay just be clicking the URL. PayPal.me helps us to receive money even from a person without a PayPal account

The PayPal.me is mostly used by the webmasters and business people who often receive money for their business and services.

Previously, we have to give our email to the sender or raise an invoice each time in order to receive money to the PayPal account.

By using PayPal.me we can create a unique URL and put it on the website or send the email with the URL. So whenever someone wants to pay you they can do it by clicking the link without contacting the receiver.

The PayPal India users cannot send money directly using the PayPal balance. Instead, we can only pay using the credit or debit cards of supported bank accounts listed below.

PayPal will be very helpful to pay the international sellers and friends within few seconds.

You can send money to by clicking send and request link on PayPal. You should then click pay for goods & services and then enter the email or mobile number of the receiver to send money.

To make things simple, you can ask the receiver to send their PayPal.me URL so that you can pay money with just a mouse click.

If you're paying for products and services to an online company, they will have "Pay using PayPal" button where you can pay with or without a PayPal account.

There is a limitation in sending money to others through PayPal. You cannot sometimes send money to another account due to following reasons receiver account is not in good standing, receiver account closed, receiver account is under review.

PayPal India users cannot send payments to anyone in India as per the rules of Reserve Bank of India.

Transaction fees - PayPal:

This table will help you to find the transaction fee structure of PayPal.

PayPal transaction fees to send and receive funds

Transaction nature

Seller/Receiver

Buyer/Sender

Remarks

Personal payments

Free

2.9% + $0.30

No

Online payments

Varies

2% up to $20

Up to $2 [USA]

Goods and services

Varies

2.9% + $0.30

No

Withdrawal fees**

Free

Free

Bank transfer

Withdrawal fees**

$1.50

$1.50

Check

Currency conversion

Varies

Varies

Market price

eBay payments

3.3% + fixed fees

2.9% + $0.30

eBay

Web payments & invoices

4.4% + fixed fees

2.9% + $0.30

Others

**Different withdrawal methods

Currency conversion fees PayPal India:

The PayPal will charge us a currency conversion fees other than transaction fees whenever we send or receive money.

Usually, PayPal charges 3% to 4.4% currency conversion fee.

Previously, I received money to my PayPal account when $1 = ₹66*. But when PayPal transfer the funds to the bank account, they converted $1 to ₹64*. So PayPal took almost ₹2* as the fee. For example, if we receive $100 to the PayPal account the actual conversion rate will be ₹6600*, but when we receive funds to the bank account we might get only ₹6400* after fee deduction of ₹200*.

Similarly, if we pay for the products or services, PayPal will charge more than current currency conversion rates including the fees.

Previously, I've paid an online merchant through PayPal when the actual currency rate was ₹66* for $1. But, while paying I had to spend about ₹69.50* including the fees. For example, if we purchase a product of price $100 and ₹6600* in Indian Rupee. We must pay about ₹6950* including the fees.

We have to pay thousands of Rupees as fees, if we send more money to the merchants from Indian(n) bank account or receive more money from PayPal to the India(n) bank account.

Link mobile number to enjoy additional features:

The PayPal users must link their mobile number(s) in order to increase the security and enjoy the additional benefits.

Linking mobile number will help you to receive SMS notification, app notification, increase security, set PIN, add the second-factor security etc.

To add the mobile number, go to the settings and click add the mobile number. Once you enter the mobile number, you will be asked to confirm.

PayPal will send an SMS with the confirmation code. Enter the confirmation code and click validate. PayPal will display a message that the mobile number is added successfully.

After adding the mobile number, you can easily log into your PayPal account using the mobile number instead of email.

PayPal protection helps the Paypal users to make transactions safer and Faster.

PayPal buyer protection protects all the PayPal users who are cheated by the sellers/merchants. So if the buyer doesn't receive the product or service as promised, PayPal will fully reimburse the product cost and shipping fees. The PayPal users do not have to worry about their money while shopping online.

Similarly, the PayPal seller protection protects the sellers from the clients who try to cheat the sellers.

Advantages and disadvantages of PayPal India:

Pros:

The PayPal is the best payment processor in the world trusted by millions of users.

The PayPal is the only Payment processors that reimburse fully for eligible purchase if the seller or buyer cheats.

PayPal is accepted in over 202 countries.

PayPal helps the small freelancers to get their earnings to their local bank account with small fees.

Using PayPal one-click purchase will help us to complete the purchases within few seconds.

PayPal.me is one of the best features in PayPal help to receive payment using a mouse click.

PayPal can be used to transfer a very small amount which cannot be transferred using wire deposits.

Cons:

If you're a freelancer and use PayPal to receive money, you might loose few percent of your money as transaction fees and currency conversion fees.

PayPal does not allow us to store money in the wallet in India and few other countries.

PayPal does not allow us to purchase using the PayPal balance in India.

Since the PayPal do not allow to store and purchase using the account balance, we have to spend a lot of money as transaction fees and currency conversion fees while purchasing with the debit or credit cards.

PayPal will not ask for OTP or verified password while making purchases. So, anyone who has the access to the PayPal account can make purchases without entering card details and card password since the card is already verified while linking.